Nice people can run a greater risk of financial problems

Nice people are at greater risk of bankruptcy and other financial hardships than those who are less satisfied, according to a new study published in the Journal of Personality and Social Psychology.

The findings show that comfortable people simply care less about money and therefore run a greater risk of mismanagement of money.

"We were interested in understanding or having a nice and warm personality, what academics in personality research describe as acceptable, related to negative financial results," said Sandra Matz, Ph.D., of Columbia Business School in New York and lead author.

"Earlier research suggested that acceptance was associated with lower credit scores and earnings, we wanted to see if that association applied to other financial indicators and, if so, better understand why nice guys seem to be the last."

For the study, the researchers looked at data collected from more than 3 million participants in different ways: two online panels, a national survey, bank account information and publicly available geographical data.

They examined whether the reason why sociable persons were more likely to experience financial problems was because of their more cooperative bargaining style or because of the lower value they give to money.

"We found that acceptance was associated with indicators of financial problems, including lower savings, higher debt and higher standard percentages," said co-author Joe Gladstone, Ph.D., of University College London.

"This relationship seems to be driven by the fact that pleasant people simply care less about money and therefore run a greater risk of mismanagement of money."

The findings show that not all amiable people were equally likely to suffer financially – the income plays a very important role in this association.

"Not every pleasant person runs an equal risk of experiencing financial problems," Gladstone said. "The relationship was much stronger for people with low incomes who do not have the financial means to compensate for the adverse consequences of their pleasant personality."

A surprising finding was that even when the mood was measured in childhood, it predicted still greater financial hardship later in life. The study included research data from a cohort study, in which the same persons were followed for more than 25 years.

To further illustrate the link, the researchers compared publicly available personalities and financial data from two areas in the United Kingdom, both of which had similar per capita income. The city that scored significantly higher on affordability also had a 50 percent higher bankruptcy rate.

"Our results help us to understand a possible factor that underlies financial problems, which can have serious consequences for the well-being of people," Matz said. "Being friendly and having trust has financial costs, especially for those who do not have the means to compensate their personalities."